Posts Tagged ‘semi custom home builder’

The video below is the first four days of construction of a home being built by Piedmont Realty and Construction. It shows ground breaking through basement wall completion and waterproofing. Scroll down for previous video or click on “Construction Video” category link for all videos to date.

In my day to day routine, I get to have conversations with prospective home purchasers on a lot of topics. One of my favorites is new construction. I love to talk about new construction vs resale and the overall marketplace. I love to talk about the different communities and how their design creates a different environment or social experience. I also love to help people understand how to compare the different homebuilder choices in the marketplace.

I am a huge fan of the feeling one gets when moving into a home that has never been anyone elses.  I’m lucky enough to get to be exposed to the latest and greatest our building community has to offer.  The first concept I will point out is the different business models within the arena of home builder choices.

On one end of the spectrum is the “production” home builder. The production home builder usually offers a selection of floor plans and a limited variety of options from which to choose. The process is very structured and customization is limited. Quite often this is the least expensive option or lowest cost per square foot option.  By building the same home or homes over and over again, its the system and process that allows the builder to take advantage of economies of scale. Limiting the customization of the home streamlines the process and cuts down on the builder’s overhead.

The opposite end of the spectrum is the custom home builder. This process usually involves starting with the design of the home with the help of an architect. Once the home is designed, the buyer is also involved in customizing the home from top to bottom. Not all buyers are prepared to do this. I speak from experience when I say the process can be overwhelming. The level of supervision and client interaction required often leads to this being the most expensive option when building a home or the highest cost per square foot. This is for the home buyer who really knows what they want and is willing to pay for it.

Finally, somewhere in between is what is commonly referred to as the semi-custom home builder. I think this business model affords the average buyer the most overall value. I will support this opinion in a future post.

Sometimes working with builders and developers affords me the opportunity of being a little bit ahead of the curve. Working with builders and developers, we are often trying to “find” the market. That is, what needs to be created to represent value in the marketplace as compared to all options new or otherwise. I often share that I think understanding the new construction market is vital to understanding the overall market. Working with Drew Holzwarth of Piedmont Realty and Construction, I think he has “found” a few of segments of the market in which the Piedmont offering has been well received by the marketplace.

In fall of 2009, Piedmont developed The Riverton for Old Trail’s West End Square. Single family homes (detached) under $300,000. This was the first time detached homes were availabe in this price point. Some of these lots are smaller and do not offer garage opportunity, but serve the buyer not willing to consider attached choices. What happened next is interesting to me. We immediately discovered demand for a little bit bigger home with garage and/or basement in the $350-$400k+ range. Piedmont’s semi-custom process allowed the flexibility to immediately adapt to the marketplace. As it turns out, Phase V of Old Trail offered 6 lots with room for garages and/or basements. When all of these lots were sold in short order I was disappointed, as this was such a perfect for this “new” real estate market.

And then came Village Commons, Old Trail’s newest phase. Adjacent to the town center, this phase offers more lots with room to add garage and even room to widen the footprint of the home. Streets are not in and there are no model homes yet, but the opportunity is there for those with vision. Last week we made the first sale of Village Commons. This buyer started with the Riverton, widened the home by 2 feet, and added a third floor for 4th bedroom and third full bath. They also added a two car garage with a finished room above for a perfect studio or home office.

What I’ve seen over the last year confirms many of my suspicions about the market. There are buyers looking for quality in the form of design, finish, and energy efficiency not present in the resale market. Why is that? Because at the top of the market it got to easy. Not everything built in those years is relevant now. One of the best ways to get exactly what you want is working with a semi custom home builder. I will explain more about this concept in coming posts.